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IRP, at the UW-Madison, is a center for interdisciplinary research into the causes and consequences of poverty and social inequality in the United States.
As one of three National Poverty Research Centers sponsored by the U.S.
Department of Health and Human Services, IRP has a particular interest in poverty and
family welfare in Wisconsin as well as the nation.

Poverty Measurement: Federal Supplemental Poverty Measure (SPM)

Development of the Supplemental Poverty Measure

Plans to develop a supplemental poverty measure to complement, but not replace, the existing official poverty statistic were announced by the U.S. Commerce Department on March 2, 2010. Analysts from the U.S. Census Bureau and the U.S. Bureau of Labor Statistics are developing the measure, which uses the best new data and methodologies to obtain an improved understanding of the economic well-being of American families and of how federal policies affect those living in poverty. The initiative to create the new statistic was included in President Obama’s FY2011 budget proposal, but was not funded; however, research on many aspects of the Supplemental Poverty Measure (SPM) has gone forward nonetheless.

The official poverty measure, which has been in use since the 1960s, largely estimates poverty rates by looking at a family’s or an individual’s cash income. It will remain the definitive statistical measure. The supplemental measure is a more complex and refined statistic, including such additional items as tax payments and work expenses in estimating family resources. Unlike the official administrative measure, the supplemental measure is not the measure used to estimate eligibility for government programs. Instead, it is an additional macroeconomic statistic, providing further understanding of economic conditions and trends. It draws on the recommendations of a 1995 National Academy of Science report called Measuring Poverty, and the extensive research on poverty measurement that has been done over the past 15 years.

IRP Director Tim Smeeding and Ron Haskins, Brookings Senior Fellow and Co-director of the Center on Children and Families, have been discussing these same technical issues involved in poverty measurement with a group of experts who first met at Brookings Institution in October 2009. They released a letter in support of the Commerce Department’s announcement of the new, alternative measure.

In a scaled-back initiative, the Census Bureau has maintained new questions on the Current Population Survey (CPS) Annual Social and Economic Supplement (ASEC) that help inform the SPM, and the Bureau released a new set of preliminary poverty estimates using the 2011 CPS ASEC before the end of October 2011. The Bureau of Labor Statistics, however, will not publish 2010 thresholds using the SPM approach in a time frame that would allow the Census Bureau to publish poverty estimates in September and will not be able to add questions to the Consumer Expenditure Survey at this time. For the latest news on development of the SPM, visit Census Bureau Update on the Supplemental Poverty Measure.

Garner, Thesia I. and Kathleen S. Short. 2010. Combining Surveys for Poverty Measurement, presented at the 31st General Conference of The International Association for Research in Income and Wealth, St. Gallen, Switzerland, August 22-28, 2010.